Union Deal Moves Qantas Closer To Resolving Labor Dispute

Qantas achieved a major breakthrough in its damaging fight against its largest labor groups when its engineers union approved a contract deal with the carrier.

The airline’s agreement with the Australian Licensed Engineers Association (ALAEA) does not include the union demands that Qantas was most concerned about. While the ALAEA says it won a job security commitment, this clause is essentially the same as the one in the previous engineers’ contract.

The ALAEA is one of three unions that had reached stalemate with Qantas over contract negotiations. The contract dispute escalated dramatically as the unions launched industrial action, including limited strikes. The airline eventually responded on Oct. 29 by grounding its fleet and announcing a lockout of the three unions.

The government called on the country’s main labor board, Fair Work Australia (FWA), to intervene and end the industrial action and the grounding. FWA has now assumed control of negotiations with the authority to impose binding arbitration.

Qantas and the ALAEA have approached FWA with the contract deal, which effectively pre-empts binding arbitration.

Of the three labor groups, the ALAEA was considered the most likely to reach a deal outside binding arbitration. The union has held a series of meetings with members to discuss a proposed agreement, and it received enough support from members for union leaders to sign off on it. The airline also agreed to the terms.

The other two unions–representing pilots and ground workers–are still in arbitration, and a similar breakthrough is not imminent, sources tell Aviation Week. The pilots are considered to be closer to the airline position than the ground workers.

The engineers’ deal will put pressure on the other groups to reach agreement, although if they do not, arbitration could be a lengthy process.

Qantas says the ALAEA deal extends for three years, through Dec. 31, 2014, although it also applies retroactively from the beginning of 2011. It includes wage rises that are equivalent to 3% a year for the next three years.

One of the biggest points of contention in the contract dispute was job security commitments. The ALAEA had sought to extend existing job security provisions, in one case demanding that an AirbusA380 maintenance hangar be built, so that more A380 work could be brought back from overseas.

However, this and other changes to the job security clause do not appear in the contract agreement. The provision still requires that Qantas retain existing job functions under the contract, subject to factors that are outside the carrier’s control.

Airline CEO Alan Joyce stresses that the deal “does not contain any of the restrictive demands that would have handed control of parts of the airline to the union.” Joyce says that throughout the negotiations, Qantas was willing to offer “reasonable” pay increases, provided the union withdrew these demands. “This deal was achievable nine months ago,” Joyce says.